China's Yanzhou inks A$700 mln deal for Gloucester Coal

Thu Dec 22, 2011

* Yanzhou says to merge Australian unit with Gloucester Coal
* Deal worth A$700 million in cash, or A$3.20 per share - Yancoal
* Reverse takeover creates one of largest coal companies in Australia

SYDNEY/HONG KONG, Dec 22 (Reuters) - China's Yanzhou Coal Mining Co Ltd said on Thursday it plans to merge its Australian unit with Gloucester Coal in a A$700 million deal that will create one of Australia's largest listed coal companies.

Australia's coal sector has seen a series of mergers and acquisitions initiated by Asian suitors hungry to satisfy fast growing domestic demand for coal from steel mills and power generation plants.

Yanzhou Coal's deal for Gloucester is also yet another case of a Chinese company buying up natural resource assets in Australia, tapping its commodity base to fuel massive residential, commercial and infrastructure projects across China.

Sydney-based Gloucester will be merged with Yancoal Australia Ltd., and Yanzhou will own 77 percent of the new company. Gloucester shareholders will own the rest and receive A$700 million ($705.36 million) in cash, the equivalent of A$3.20 in per share, Yancoal said in a statement. Each Gloucester Coal shareholder will receive one share in the merged company.

Gloucester closed at A$7.03 in Sydney on Dec. 19, before trading in the shares was suspended.

The reverse takeover of Gloucester would give Yanzhou Coal's Australian unit, Yancoal Australia Ltd, a local listing without having to risk an initial public offering in a shaky market, where coal stocks in particular have been pummelled on worries about a global economic downturn.

A condition of Yancoal's A$3.3 billion takeover of another Australian coal miner, Felix Resources, in 2009 required it to float at least 30 percent of the business on the local exchange by 2012.

Yanzhou Coal chairman Li Weimin said in a statement the merger plan allows it to meet that requirement and at the same time "reflects the company's strategy to grow our Australia business and to become a global leader in the coal mining sector."

Gloucester, which has a market value of A$1.4 billion, is 64 percent owned by commodities trader Noble Group. Trading in the coal firm's shares were suspended earlier Thursday ahead of the expected offer.

Yanzhou said the transaction is subject to various approvals, and plans to complete the deal in the second quarter of 2012.

Yancoal and Gloucester both have mines and projects in New South Wales and Queensland. Gloucester aims to expand production to 10 million tonnes a year by 2016, while Yancoal expects to produce 20 million tonnes a year by 2015.

That would put a combined group ahead of Whitehaven Coal , which last week announced a $2.5 billion takeover of Aston Resources to create a company producing 25 million tonnes a year by 2016.

Since taking over Felix Resources, Yancoal has bought Syntech Resources for A$203 million and is about to complete the A$297 million acquisition of Premier Coal from Wesfarmers.

It sought to buy Whitehaven Coal earlier this year but the two were unable to settle on a price.

(sourced Reuters)

Noble Group seeks more Mongolia coal deals

Thursday, 03 Mar 2011

Noble Group Ltd the Hong Kong based supplier of energy, food and mining commodities, sees Mongolia as its next opportunity to expand in coal and build on its record 2010 profits.

Mr Ricardo Leiman CEO of Noble Group said that “We have staff looking at several opportunities in Mongolia, especially in exploration companies. Mongolia will be an area specifically for quarter two. We look at developing a similar model there to what we have in Indonesia and Australia.”

Noble won exclusive overseas marketing rights for PT Berau Coal, Indonesia’s No 5 producer, in November, adding to its Australian assets which include Gloucester Coal Ltd. The Berau deal will contribute nicely to 2011 earnings, Mr Leiman said after his company posted record annual net income of USD 606 million from USD 57 billion in sales.

Aspire Mining Ltd which explores for coal in Mongolia said that Noble bought 4.1% of its shares and is in preliminary talks on how the two can cooperate. Xanadu Mines Ltd which plans to develop coal and iron ore fields in Mongolia.(sourced from bloomberg)

Dry miner looks to cash in on spot prices Mathew Murphy

January 28, 2011

GLOUCESTER Coal has capitalised on its status as one of the only coal companies largely unaffected by recent heavy rainfall, posting a record quarter for coking coal sales.
The NSW-based company sold 222,000 tonnes of coking coal, used in steel-making, a 49 per cent increase on the December 2009 quarter. Thermal coal sales receded 8 per cent, from 295,000 tonnes to 272,000 tonnes as Gloucester cancelled fixed Australian dollar forward sales contracts in order to take advantage of rising prices.
Gloucester said it was hoping to cash in on soaring spot prices for coking coal, a consequence of the number of coalmines under water.

''The company continued to seek to maximise production and sale of coking coal while maximising total output by topping up with exports of thermal coal,'' it said in a statement.
''The effects of flooding in Queensland's Bowen Basin is manifesting itself in rapidly rising coking coal prices. The company is yet to agree [on] its coking coal pricing for the January-March 2011 quarter, however a substantial increase in price is expected.

''In addition, the company has an uncontracted volume of coking coal available for sale during the quarter and as such should be well-positioned to benefit from the surge in spot prices.''
The chief executive of Gloucester, Barry Tudor, said production would ramp up quickly following the approvals received at its Duralie and Stratford operations.
''[The projects] are important steps towards increasing the Gloucester Basin product coal output up to 3.5 million tonnes per annum by 2014,'' he said. Gloucester shares fell 5¢ to $12.90. (sourced:smh.com.au)